It’s Time to Rethink Public Utilities!
August 9, 2020 - More than 1.4 million homes and businesses experienced a power outage in the wake of tropical storm Isaias. In particular, more than 50% of JCP&L’s 1.1 million customers lost power.
There have been public outcries after major storms due to widespread power outages. This happened after Hurricane Irene in 2011, superstorm Sandy in 2012, winter storms Quinn and Riley in 2018, and now tropical storm Isaias.
Not surprisingly, there are already calls by elected officials for a “post-mortem” and/or legislative action. The past responses have been investigations, public hearings and the introduction of bills that have languished in our legislature.
Also, not a surprise, JCP&L has borne the brunt of criticisms from mayors and other elected officials. The problems with their antiquated systems, storm preparedness, communications and response time are well documented in the media and public hearings.
In the past, JCP&L was awarded extra money by the NJ Board of Public Utilities as part of its rate case to improve reliability. A rate case settled in 2015 indicated that JCP&L may have “over-earned” between $500 million to $1 billion over a 10-year period. While the BPU ordered a rate reduction on a going-forward basis, JCP&L got to keep the $500 million to $1 billion, all at the expense of ratepayers and the continued lack of maintenance or improvement to their distribution system. It appears that after making some initial repairs, the extra money awarded went to dividends to its corporate parent, FirstEnergy Corporation in Ohio.
New Jersey and much of our nation operate under a business model whereby an essential public service (electrical power) is provided by for-profit companies that were granted a franchise to operate as a monopoly. This model has an inherent conflict of interest that benefits management and shareholders at the expense of captive customers who cannot switch their utility company.
History is replete with stories that for-profit utility companies have worked against public interest despite their mandates to operate otherwise. According to a recent federal criminal complaint, FirstEnergy was implicated in a $60 million bribery case that resulted in a $1.3 billion bailout for two of their nuclear plants.
One definition of insanity is doing the same thing over and over again and expecting different results.
Given the history, it seems clear that this business model with its inherent conflict of interest and the high costs to our society, which includes social and economic costs from power outages, can’t be the right model for an essential public service.
Past responses and measures have not shown to be effective. It is time for our New Jersey lawmakers to rethink this critical issue. Clearly, a paradigm shift is needed!
A good first step is to consider revoking JCP&L’s franchise. In California, some towns and counties proposed a co-op to replace PG&E, the utility company held to be responsible for the wildfire that destroyed Paradise. In parts of New Jersey, electricity is provided by a co-op owned by either a township or its customers.
Kin Gee
President
CHARGE - Consumers Helping Affect Regulation of Gas & Electric
